AirAsia to connect 9 destinations by year end

AirAsia India is looking to price itself 30-35% cheaper than rivals, expects to break even in 4 months.

Bangalore |
Published:June 13, 2014 11:58 am

An AirAsia India Airbus A320 takes off as it embarks on the carrier’s inaugural domestic flight to Goa from the Kempe Gowda International Airport in Bangalore. (PTI)

The newest airline in the country, AirAsia India, aims to compare its average fares with first-class train tickets and not just depend on metro cities as most Indian carriers do, its chief executive officer Mittu Chandilya said on Thursday. Addressing the media on the occasion of the airline’s inaugural flight from Bangalore to Goa, Chandilya said the airline will have at least nine destinations by the end of the year and will add a plane a month to its fleet over the next few months.

The airline, a joint venture between Malaysia’s AirAsia Berhad, Tata Sons and Telstra, is looking to price itself 30-35% cheaper than rivals and expects to break even in four months. It will compete with other low-fare carriers in India such as IndiGo, GoAir and SpiceJet. The airline will announce its next route, likely to Kerala, next week.

“In India, the average price of an airline ticket is significantly high and there is no difference between a full service carrier and a low-cost carrier. That’s why I keep saying that India hasn’t seen a low-cost carrier yet,” Chandilya told reporters at Bangalore’s Kempegowda International Airport ahead of the inaugural flight. “Railways first-class is my target. I don’t compete with other airlines.”

On the inaugural flight, around 40% of the 186 passengers paid a promotional fare of R990, 5% paid a fare of R5 plus other costs and the rest paid under R1,900, he said.

The passengers on this flight had paid a fee for check-in baggage but new bookings since last week have not been charged. AirAsia is charging for check-in baggage — which other carriers normally offer free up to 15 kg — as part of a model of unbundling fares. The Directorate General of Civil Aviation had recently raised objections to this.

“It is very much in discussion at this point, and hopefully the issue should be resolved in a month or so,” said Chandilya. “Our belief is that unbundling fare makes pricing truly transparent. And the rationale for that is you’re very transparent about what that base fare is and people keep having the ability to take on any kind of service they want. So it’s customised to them.”

The Chennai-headquartered airline will use Bangalore as its hub and is hoping that the Karnataka government will reduce the state tax on aviation turbine fuel which is among the highest in the country. “I’m hopeful they will bring that down. The only way you can have a hub carrier is you bring fares low enough so people really fly with it. I truly believe that we will be the people’s airline,” he said.